Top Crypto News – 16/07/2018

Schnorr Is Looking Poised to Become Bitcoin’s Biggest Change Since SegWit

Schnorr is coming…

In fact, the bitcoin upgrade arguably took its most significant step yet toward implementation last week when influential developer Pieter Wuilleunveiled a draft outlining its technical makeup. With the release, the idea, one that’s been in the works by bitcoin developers for years, is one step closer to improving the scaling and privacy of the world’s most valuable cryptocurrency.

Effectively, this sets up Schnorr as the next big change to bitcoin, meaning it will be the largest code change since Segregated Witness (SegWit), a pivotal bug fix that prompted a drawn-out battle in the bitcoin community last year before ultimately being adopted.

At a technical level, adding support for Schnorr, a digital signature scheme, would give bitcoin users a new way to generate the cryptographic keys they need to used to store and send bitcoin. By doing so, it also paves the way for a number of exciting benefits, including tackling privacy and scalability, arguably two of bitcoin’s most worrisome problems.

“It is a building block for a variety of improvements,” Wuille told CoinDesk, adding there are even some further-out improvements that haven’t gotten a lot of attention quite yet. And while Wuille hopes the change will ultimately be adopted, he added it’s “ultimately up to the users” if they want to adopt it – as was the case with SegWit.

Co-authored by several top bitcoin developers, including the likes of Bitcoin Core contributor Johnson Lau and Gregory Maxwell, the technical, math-ridden proposal outlines the exact signature scheme that could be coded in bitcoin.

And while it’s far from that final goal, it’s a necessary piece.

Blockstream engineer and co-author Jonas Nick told CoinDesk:

“Standardizing Schnorr for bitcoin is a big step towards using it in bitcoin.”

A way forward

For one, the BIP draft helps to avoid future confusion by proposing a standard that ensures that all developers and merchants eventually implement the Schnorr signature code in the same way.

Though the full description can be read in the highly-technical BIP, the main idea is it describes the math necessary to produce Schnorr signatures, offering an alternative to Elliptic Curve Digital Signature Algorithm (ECDSA), the sole algorithm used to produce keys and verify transactions in bitcoin today.

Schnorr will have one thing in common with the signature scheme it seeks to crowd out, though. If plan is accepted, it will use the same mathematical “curve” that ECDSA uses to produce the keys, called “secp256k1.”

It’s a lot of tricky math, so it’s no surprise the release sparked technical discussion on the bitcoin developer mailing list.

But nothing major has come up so far and developers are optimistic, especially since one of Schnorr’s key benefits is that, unlike ECDSA, Schnorr’s security can actually be proved mathematically.

While Schnorr offers a number of improvements on its own, developers are also excited that it will also pave the way for a range of changes that can be built on top of it, such new privacy techniques.

Right now, it’s obvious when users send so-called “multi-sig transactions,” which are a more advanced type of transaction where more than one person is required to sign off on a transaction, because of bitcoin’s public ledger. But Schnorr pave the way for a technique that will make these transactions look the same as every other transaction.

Nick noted Schnorr will also lead these advanced transactions will be cheaper as well, an important improvement since transactions can grow very expensive in times of congestion.

And it seems like new tech built on top of Schnorr are being proposed on a regular basis.

“Due to the wealth of new discoveries lately I believe these technologies should be developed in a step-by-step basis, and my focus for a first step is just Schnorr and Taproot,” Wuille said, referring to the bitcoin improvement “Taproot” proposed earlier this year by another influential bitcoin developer Greg Maxwell to further improve bitcoin’s privacy.

Less detractors?

That said, there’s still a ways to go – Schnorr’s a massive project with many moving pieces.

While this BIP proposes a standard for developers to chime in on, Nick noted there’s also a code implementation that’s been in the works for ages, putting much of what’s in the BIP draft into practice.

Plus, once developers fight it out until they decide there are no longer any outstanding problems, developers need to come up with a way to actually add it to bitcoin, among other things.

“The specifics for how to deploy it in bitcoin are still being actively discussed,” Nick said.

Having been through a few so-called “consensus” changes in his years as a bitcoin developer, Wuille gave a particularly long list of things to do.

“Like any consensus change, it will be a long process involving fully fleshing out a draft for integration, publishing it, gathering comments from the technical community and ecosystem, writing implementations of both consensus rules and integration in wallet software, proposing a deployment plan, and if all goes well, get it activated,” he said.

In the email where he introduced the BIP, he added that if the BIP is “accepted” by the broader bitcoin community “we’ll work on more production-ready reference implementations and tests.”

Not to mention, there’s another potential stumbling block on everyone’s minds.

Schnorr is a particularly big upgrade. Although changes are being made to bitcoin every day, with code contributions coming from a diverse group of contributors stationed around the world, Schnorr is a rarer type of change, since it affects the most important rules in bitcoin.

SegWit was the last code change “consensus” change made to bitcoin, sparking a debate so big, those who disagreed with the change split off and created their own cryptocurrency with SegWit removed.

The most enthusiastic SegWit supporters even made hats to express their support for the code change. Blockchain consultant Francis Pouliot joked that similar advocacy hats should be made in advance of Schnorr, in case a similar vicious debate breaks out.

He’s not the only developer mulling this possibility.

“It looks for now there are less detractors than there was for SegWit,” developer Riccardo Casatta said, though adding he’s not taking any chances:

“You cannot say how things​ will go and as always, it is better to be patient.”

Welding laser image via Shutterstock

Written by CoinDesk.com

Major Korean Exchange Bithumb Expanding into Japan and Thailand

Expanding into Thailand

Bithumb is currently working on obtaining regulatory approval from the Thai Securities and Exchange Commission (SEC), local media reported Friday. The exchange is the second largest in South Korea at the time of this writing, with a 24-hour trading volume of about $358 million, behind only the Kakao-backed Upbit with a $582 million trading volume during the same time period.

The exchange has already established a Thai subsidiary, Bithumb (Thailand) Company Limited, with registered capital of 3 million baht (~US$90,000). Zdnet quoted the company explaining the reason for its expansion into the Thai market:

Thailand is active in e-commerce and the fintech industry, and the government is showing great interest in digital currency as it promotes smart city business.

Thailand has recently finalized its regulatory framework for cryptocurrencies and initial coin offerings (ICOs). Bithumb has been building its Thai website, the publication added, noting that it plans to start service in Thailand at the end of October.

Bithumb Thailand’s website. Photo: Zdnet.

Expansion into Japan

Bithumb Japan’s website. Photo: Zdnet.

Japan legalized cryptocurrency as a means of payment in April of last year. All companies seeking to operate an exchange in the country must obtain approval from the country’s top financial regulator, the Financial Services Agency (FSA). However, with the hack of Coincheck in January, the FSA has been strengthening its oversight of crypto exchanges and imposing a stricter exchange approval process.

Nonetheless, Bithumb is seeking approval from the FSA with a plan to open an exchange in Japan in February next year, the news outlet conveyed. The exchange also revealed that “it plans to set up an exchange that supports the largest number of coins in Japan,” the publication noted.

Global Expansion Plan

Earlier this year, Bithumb announced that it is looking for partners for its global expansion. The exchange says it will work closely with overseas partners to launch platforms that are faster and more efficient for traders worldwide.

Projects which Bithumb will collaborate with potential partners include “cash (deposit/remittance/debit) management processing, the operation of an exchange platform, [and] marketing & promotion and customer service,” the exchange detailed. According to the announcement:

Bithumb is preparing exchange platforms for countries under the global expansion plan and we are looking for great and potential partners (corporation, entity or group) worldwide…The exchange platforms under final development stages are USD / JYP / EUR / CNY / INR / GBP / AUD / CAD / PHP / RUB and [there] will be more soon when there are any service demands.

According to Money Today, Bithumb has also established a subsidiary in Singapore and Britain. “We are considering establishing overseas subsidiaries in various countries such as the U.S. and Europe, but the time has not yet been determined,” the exchange clarified.

In April, the third largest crypto exchange in South Korea, Coinone, announced its expansion into Indonesia.

Written by Bitcoin.com

American Express Thinks Blockchains Could Help Prove Payments

American Express is on the hunt for better ways of proving when transactions occur and a new patent filing suggests the financial services giant may be looking at blockchain as part of a possible solution.

In a patent application released by the U.S. Patent and Trademark Office last week, American Express Travel Related Services describes using a “blockchain-based system” in order to receive “payment confirmation including a transaction amount and a merchant identifier.”

The concept is aimed at adding to what AmEx calls the “limited” number of options for generating quality evidence that payments happen between merchants and their customers “beyond a receipt or ticket.

AmEx’s patent highlights the tech’s role in retaining “transaction data, contract data, proof-of-payment data, identification data, and/or other information as desired,” with the idea being that a blockchain network – possibly a public one – would serve as an extra layer of proof for transactions that take place on AmEx’s network.

As a result, the potential applications of such a system are quite varied, the company contends.

American Express says that data can be used to “unlock a hotel, rental or shared economy property door using the card (e.g., that was used for the payment) to look up proof of payment on a blockchain.” Moreover, “the system may be leveraged to provide ticketless access to venues (e.g., movie theater, sports event, concert, etc.) to a customer,” and so forth.

While the decision on whether this blockchain system will be hosted on a private, public or consortium network is up for grabs, the application does highlight how “public networks may leverage the cumulative computing power of the network to improve security.”

This patent application by American Express is the latest in a series that have been launched as early as October of last year when the same branch of the company filed for a different patent related to customer rewards.

Fast forward to today and the company has indeed begun initial trials with a custom Membership Rewards program for cardholders, leveraging Hyperledger’s blockchain technology, which it partnered with last January.